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Global property chief attacks Web 2.0 rivals
Simon Baker, CEO of News Corporation-owned REA Group, today accuses real estate
Web 2.0 sites of being a “total fad”. Speaking exclusively to Globaledge.co.uk, Baker says he had yet to see any of them lead a market, nor does he hold out much hope for them in future. “
You don’t have to look sexy to deliver,” he says, pointing out that scale, consumer traction and money to fund marketing activity are much more important than aesthetics and cute functionality.
He singles out US portal Zillow.com in particular, saying that he doubts they have the revenues to support a sustained assault on US market leader Realtor.com. “Sites like Zillow.com get a lot of press and they look great but will they deliver?” he asks. “I doubt whether they do more than US$3 million a year compared to Realtor.com’s US$300 million,” he continues, implying that lack of funds will hamper their marketing efforts.
Comparative traffic figures from Alexa.com (see graph at bottom of the page) seem to contradict this view, showing Zillow.com running a very close second to US market leader Realtor.com. A spokesperson for Zillow.com says: “In just two years Zillow has become one of the most-visited real estate sites in the US, with nearly 5 million unique visitors per month.”
It is difficult to compare the sites like for like, as Zillow.com attracts many “curtain twitchers” who are interested in the value of their own property rather than in buying or selling. However, Zillow and other Web 2.0 sites have forced the more established sites to react. Many other US real estate sites, including Realtor.com, have begun to adopt similar Web 2.0 strategies due to the increasing demand for this by consumers.
Baker doesn’t stop at the US market. Moving onto the UK, he says that he can’t see any of the smaller players challenging the market dominance of the “big four” (Rightmove, Primelocation, FindaProperty and REA Group-owned Propertyfinder.com). “Sites like Globrix have achieved scale by scraping listings from agent sites but they haven’t got the money to tell anyone and cut through the noise.”
Responding to his comments, Daniel Lee, CEO of Globrix (which interestingly is a joint venture with News Corporation subsidiary News International) denies they lack the funds to achieve significant transaction: “Our target is 1.4 million unique users a month by the end of year and we are very confident of meeting it. We have a sustainable business model, significant marketing resources and importantly, the full support and buy-in of estate agents. In this market, agents are keen to reduce their marketing costs and our model offers them a way to achieve this.”
Baker remains unconvinced of the potential of new portal start-ups. When asked what advice he’d give to fledgling portals like Globrix, he says: “Outside of Asia, South America and Eastern Europe, my advice would be, keep your money. In fact, if you were given £20 million to start a new real estate portal, the best thing to do would be to [not to start the portal at all and] set up a consultancy to take the money from them.”
Launching property portals into established markets is not easy and there are likely to be more failures than successes. The unique characteristics of the US market (it’s much bigger and more fragmented that European markets) and the consumer traction they have already gained means Zillow.com may be the exception that breaks the rule.
Simon Baker was speaking to Ashley Rigg of Globaledge.co.uk during an interview for the feature
The world's most innovative property portals.
User Comments
Interesting comments by Simon. I made similar comments in a pair of blog posts : The Failed Promise of Real Estate 2.0 and The Case Against Blogging. These posts created a little stir among web 2.0 crowd in the US...
louis cammarosano,
Homegain
It's very interesting that NI are hedging their bets but the established players do have quite an entrenched position in terms of consumer awareness and distribution of branding in agent branches. They are also very difficult to outrank in natrual search as they often have thousands of old and trusted links.
Ashley Rigg,
Globaledge.co.uk
The big question in the UK is 'can the high priced, high cost portal last forever'. For a while, it seems likely that it can as ad spend switches from print to online. Beyond that, it seems hard to bet that agents won't switch to newcomers who are cheaper, targeted and provide measurable performance. It's interesting, too, that News International is hedging its bets with a property portal and a property search engine in addition to those good old newspapers.
Rod Dowler,
zoomf.com